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The Impact of COVID-19 on Croatia’s Euro Adoption Strategy

This policy-brief analyses the process of euro adoption in Croatia and how it can be leveraged to achieve real and structural economic convergence of its economy. Short-term emphasis on fulfilling the nominal convergence criteria that are indispensable for euro membership won’t be the end of this process. In that regard, this policy-brief advocates the implementation of a list of structural reforms that that are essential to avoid the Greek and Italian scenario of short-term nominal and real convergence, followed by long-term real and structural divergence due to lagging productivity and innovation-related indicators vis-à-vis the eurozone’s core. The Croatia has a historic opportunity to use €22 euro financial package approved by EU in the aftermath of a coronavirus outbreak, in order to structurally transform its economy and stem both the flow of worrisome emigration and of rapid deterioration of social security systems.

euro adoption ; economic policy ; reforms ; MFF ; NGEU ; convergence ; COVID-19 impact

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